The district says increased pension contributions will defray the expense

When they meet

At a time when many public agencies are cutting back on retiree benefits, the Otay Water District is set to give lifetime health care to managers and their spouses.

The new benefit is proposed while raising rates 7.7 percent for the fiscal year that started this month.

The district says the cost of the lifetime benefits will be offset by increasing employee pension contributions from 1 percent of salary to 8 percent. The water district’s Board of Directors will vote on the plan today.

“We see is it as a cost-neutral benefit as well as a recruitment and retention tool,” district spokesman Armando Buelna said.

Under the new benefit plan, employees 55 or older who are not represented by a union and have worked for the district for more than 15 years will be eligible for lifetime retiree medical and dental benefits. The district will pay 100 percent of the costs for the employees and 88 percent for spouses.

Currently, none of the district’s 42 unrepresented employees — roughly one-fourth of 159 employees overall — are eligible for the benefit, Buelna said. Three will become eligible over the next five years.

Increasing the pension contribution will not lower employee take-home pay, as the district will cover the amount with a raise. That is, the 7 percent added pension contribution will be covered by a 7 percent raise.

District officials said the plan will save the district $33,900 over the next two years.

The cost of the added health-care benefits will be $316,400 over that time. And the money saved by no longer covering the 7 percent share of employee pension contributions will be $350,000.

Critics say that the district has not done any long-term analysis to determine how it will pay for the benefits in the future.

“To give a lifetime benefit for a contribution you are required to pay for anyway is an even worse deal for ratepayers,” said Chris Cate, vice president of the San Diego County Taxpayers Association.

Buelna said the district did do a longterm analysis of the costs, although they are not spelled out in the staff report the board will consider today.